Sony targets eventual repeat of last year's record after flagging profit dip

TOKYO (Reuters) - Sony Corp will work to ensure last year’s record profit was not a one-off, its new management said on Friday, after the Japanese conglomerate forecast a dip in earnings this year in anticipation of a stronger yen.

Sony Corp's logo is seen at its news conference in Tokyo, Japan November 1, 2017. REUTERS/Kim Kyung-Hoon

Sony’s lengthy return to profitability peaked in the year ended March under former CEO Kazuo Hirai. He achieved the feat by switching from thin-margin consumer electronics in favor of video games and smartphone imaging sensors. Signaling approval, investors have driven Sony’s share price to decade highs.

Hirai has since handed control to Kenichiro Yoshida, who has taken over just as global smartphone sales start to slow and as Sony’s PlayStation 4 (PS4) nears the end of a games console’s typical life cycle.

“We’ll work to maintain high profit levels so that we don’t make the last financial year’s record profit a one-time event,” Chief Financial Officer Hiroki Totoki said at his first earnings briefing in the role.

The electronics and entertainment firm forecast operating profit of 670 billion yen ($6.13 billion) for the year through March. That would be 8.8 percent lower than last year when earnings exceeded the previous peak set in March 1998.

The outlook also compared with the 765 billion yen average of 23 analyst estimates compiled by Thomson Reuters.

Sony said it expects profit at its semiconductor business to fall 39 percent due to slowing smartphone demand and a stronger yen that pulls down profit earned in other currencies. The business includes imaging sensors supplied to such smartphone customers such as Apple Inc.

“Growth in imaging sensor demand will slow in the near term as the smartphone market matures,” Totoki said. “But in the medium and long term, we expect further growth as applications for the image sensors expand to other means of sensing, as well as to surveillance, factory automation and automobiles.”

In gaming, Sony sees profit rising 7 percent as sales of high-margin online software compensate for slowing sales of a console released late in 2013.

With games consoles usually upgraded every five to seven years, one of new CEO Yoshida’s first priorities will be the development of a PS4 successor.

Moreover, as well as consolidating Sony’s turnaround, Yoshida will also be tasked with rebuilding the firm’s reputation for innovation after years of restructuring.

In a sign of its intention, Sony revived its robotic dog “Aibo” in January more than a decade after shelving the innovative project.

It is also collaborating on robotics with Carnegie Mellon University in the United States with initial focus on food preparation and delivery.

($1 = 109.2800 yen)

Reporting by Makiko YamazakiEditing by Christopher Cushing